After the State Council decided to provide subsidies for energy-saving air conditioners, flat-screen TVs, refrigerators, washing machines and water heaters in May, the Ministry of Finance, the National Development and Reform Commission and the Ministry of Industry and Information Technology last month decided to include unitary air conditioner, energy-saving computers, and industrial products such as fans, water pumps, compressors and transformers into the coverage of financial subsidies.

At least one year of promotion of this measure will be implemented to push the market shares of energy-saving products to surpass 40 percent. The central government will add another 14 billion yuan as subsidies. It is expected to stimulate consumption or investment of 155.6 billion yuan and save about 31.3 billion kWh electricity per year. Eight categories of consumer goods and five categories of industrial products have been so far included in the coverage of financial subsidies for energy-saving household appliances.

According to Edward Huang, strategist at Haitong International Research, in order to further expend the policy influences, the government decided to include a number of energy-saving industrial products into the subsidy coverage. He expected that the energy-saving policy will gradually expended to industrial sectors in the future.

These policies are meant to stimulate domestic demand as well as promote energy saving and emission reduction at the same time. Huang believed that the subsidy policy will help boost domestic demand, increase market shares of energy-saving products and achieve the government’s energy saving target.

The market share of highly efficient energy-saving constant-frequency air conditioners as well as Grade-I and Grade-II air conditions was merely 5 percent when the promotion policy was launched in 2009, then the proportion surged to 80 percent in 2011. Therefore, Huang expected that with increasing awareness of energy saving and environmental protection among consumers and maturity of energy-saving technologies, manufacturers with well-developed energy-saving products will be increasingly favored among consumers.